Making Tax Digital LITRG Press release: 100 days to digital tax deadline – but where’s the exemption guidance? With just over 100 days to go before it becomes compulsory for most VAT registered businesses to keep digital records and file their VAT returns via software, the Low Incomes Tax Reform Group (LITRG) is very concerned that HMRC are yet to publish detailed guidance to explain when someone might be able to claim exemption from the new rules and how they should do this. This will leave some worrying unnecessarily as to how they are going to cope with the new regime and others with very little time to prepare if their application for an exemption is turned down unexpectedly. Under Making Tax Digital for VAT, VAT-registered businesses with a taxable turnover above the VAT threshold (currently £85,000) will be required to keep records digitally and use software to submit their VAT returns from 1 April 2019. However, certain groups of people, for example those who are ‘digitally excluded’ due to disability, age, remoteness of location or any other reason - may be excused from Making Tax Digital for VAT altogether. The Government has said extending Making Tax Digital to other taxes will not happen before 2020 at the earliest. Head of Team at LITRG Victoria Todd said: “We are very concerned that HMRC have not yet published any detailed information as to how exemption from Making Tax Digital for VAT may be obtained, with the start date so close. HMRC have said that people should contact the VAT helpline to speak to an adviser if they think they should be exempt. We would like to see more specific guidance which explains what information and evidence [...]
Cessation of Worldwide Disclosure Facility Tax payers have a few weeks left to take advantage of The Worldwide Disclosure facility. The Worldwide Disclosure, which opened in September 2016 is closing from 30 September 2018. The disclosure dealt with income and gains which have an offshore element in them. From 30 September 2018, there will be new legislation to replace the Worldwide Disclosure, called "Requirement to Correct". Individuals disclosing undeclared income and gains will subject to harsher penalties under this regime. The Financial Secretary to the Treasury, Mel Stride MP, said: Since 2010 we have secured over £2.8bn for our vital public services by tackling offshore tax evaders, and we will continue to relentlessly crack down on those not playing by the rules.This new measure will place higher penalties on those who do not contact HMRC and ensure their offshore tax liabilities are correct. I urge anyone affected to get in touch with HMRC now. HMRC have stated: "From 1 October more than 100 countries, including the UK, will be able to exchange data on financial accounts under the Common Reporting Standard (CRS). CRS data will significantly enhance HMRC’s ability to detect offshore non-compliance and it is in taxpayers’ interests to correct any non-compliance before that data is received." Worldwide Disclosure Facility is used mostly for foreign income and property. HMRC have stated that "over 17,000 people have already contacted HMRC to notify the department about tax due from sources of foreign income, such as their holiday homes and overseas properties." HMRC have provided examples of what could be construed as offshore assets : art and antiques; bank and other savings accounts; boats; cash; debts owed [...]
IR35 for public authorities HMRC have issued revised guidelines on who falls within the remit of a public authority under IR35. The changes apply from April 2017 and relate to whether the legislation applies to one off payroll contracts. The guidance can be found below: www.gov.uk/guidance/off-payroll-working-in-the-public-sector-reform-of-intermediaries-legislation Public authorities need to decide whether the off payroll working rules apply and the conditions have been met. They will need to deduct income tax and nation insurance contributions if the worker is paid directly, or advise the agency if the off payroll working rules apply before the contract or work starts. The definition of a public authority includes government departments,agencies and local authorities, companies controlled or owned by the public sector, schools and universities and the National Health Service. Where a public authority has fully contracted out services to a third party and the workers do not personally provide their services to the public authority, then the rules would not apply. A Managed Service Company (MSC) is a form of intermediary company through which workers provide their services to end clients. The worker doesn’t exercise control over the company. If the worker is providing their services to a public authority through an MSC, the off-payroll working in the public sector rules will apply.
Supreme Court takes a strong stance on the Rangers EBT case HMRC is likely to issue follower notices to employee benefit trusts (EBTs) currently under enquiry, where the circumstances match those in the Supreme Court’s decision in the Rangers case, says the CIOT. www.tax.org.uk/media-centre/press-releases/press-release-supreme-court-take-tough-line-rangers-‘landmark-tax-case’ The Supreme Court has decided1 that tax planning undertaken by Rangers Football Club2 involving an Employee Benefit Trust (EBT) did not succeed in avoiding employment income tax and National Insurance Contributions on amounts paid to the EBT for players and executives. This followed successes by the Club in the First Tier and Upper Tier Tribunals but a reversal in the Court of Session. Lord Hodge, delivering the judgement of the Court, said that the appeal raised a “fundamental question about the nature of the income tax charge on employment income” but he was ultimately very clear in his view that “the sums paid to the trustee of the Principal Trust for a footballer constituted the footballer’s emoluments or earnings”. Colin Ben-Nathan, Chair of the CIOT’s Employment Taxes sub-Committee, said: “We understand that HMRC have a large number of enquiries ongoing into EBTs at the moment and they will therefore feel vindicated by this decision. “Whilst many employers have already settled with HMRC, for those that have not it is likely that HMRC will now issue “follower notices”3 where they consider that the circumstances sit on all fours with Rangers. These notices will require employers to pay up the tax or face a penalty if they fight on but lose in the courts, neither of which choices will be particularly appealing after the Rangers decision.” He added that: “This judgement demonstrates that the courts are taking an increasingly tough line on tax [...]
A SIMPLE GUIDE TO THE BUDGET 2017 This is a basic guide to the Budget 2017. It is an introduction only and should not be used as a definitive guide, since individual circumstances may vary. Specific advice should be obtained, where necessary. A stronger, fairer, better Britain were the themes of the Budget. You can read the individual measures below. Marriage allowance This applies from 6 April and allows for the transfer of £1,150 of a personal allowance to a spouse or partner. Self-employed National Insurance Contribution The main rate of Class 4 NIC's will increase (from the current rate of 9%) to 10% from April 2018 and to 11% from April 2019. Dividend Allowance The tax-free dividend allowance was introduced from April 2016 so that the first £5,000 of dividend income would be tax free. The tax-free dividend allowance will be reduced from £5,000 to £2,000 from April 2018. Corporation tax The corporation tax rate will be reduced from 20% to 19% for the 2017/18 tax year and to 17% by 2020. Annual Investment Allowance The annual investment allowance of £200,000 per annum remains available for companies and for unincorporated businesses. Making tax digital Rollout beginning April 2018; however for unincorporated businesses with a turnover below the VAT registration threshold there would be a delay of one year to the introduction of quarterly reporting. UK Deemed Domicile Individuals who are not domiciled in the UK will be deemed to be UK domiciled for tax purposes if they are either resident in the UK for 15 of the past 20 tax years, or if they are born in the UK with a UK domicile of origin and return to the UK having obtained a domicile [...]
National insurance contribution reversal for an alleged negligent director FIRST TIER TRIBUNAL CASE ANTHONY PETER BROUGHTON-HEAD Appellant - and - THE COMMISSIONERS FOR HMRC Respondents The Tribunal determined the appeal on 6 February 2017 Abstract: Negligent director - balancing of evidence - accruing national insurance years for pension purposes - reinstating contribution years. Introduction: Mr Broughton-Head appealed against the decision of HMRC in relation to the payment or non-payment of Class 1 National Insurance Contributions (NICs) between 1985 and 1991. The appeal related to the tax years 1986 to 1989 as they were important to the appellant in respect of his pension. The appeal was against a decision which stated the the taxpayer had paid nil national insurance contributions during the tax years 1985 to 1991 and he was accused of being a negligent director. Background: The Social Security (Contributions) Regulations 1979 makes provision for the treatment for the purposes of contributory benefit of late paid or unpaid Class 1 contributions. Where the late payment or failure in making payment is shown not to be attributable to the negligence on the part of the primary contributor, the primary contribution is to be treated as duly paid. The appeal was against the previous decision that the appellant was a negligent director. He was the director of a company called Broughton- Head Timber Ltd (Timber), which was wound up on 19 January 1994. The Insolvency Section of HMRC investigated matters and concluded that he was a negligent director and that no contributions had been paid for the tax years 1986/87, 1987/88 and 1988/89. The appellant’s contributions for those tax years were removed from his record. Case details regarding the contributions were not available. The appellant requested HMRC in September 2014 to [...]
When planning out their estates, many people forget about inheritance tax. They bequeath their belongings to their loved ones, and they don't think about their heirs having to pay that inheritance tax on both property and money that is inherited. Even less people think about it these days because it's not been in the headlines recently. It is important to understand that just because the UK has this inheritance tax doesn't mean that certain groups of people aren't exempt. That is why it's important to know the specific laws that surround this type of tax. Currently the inheritance tax threshold is £325,000 per person or £650,000 for a married couple. This is only valid if the first person to die leaves their entire estate to their partner. Everything over this is subject to a 40% levy. Inheritance tax needs to paid within 6 months of the person dying otherwise there will be interest to pay on the estate. Most people don't realise that you can pay inheritance tax over 10 years on things that are difficult to sell such as houses and certain types of shares. If you aren't sure if the inheritance tax applies to you or your beneficiaries, then it's time to find out. For starters, there are things that people can do to keep those inheritance taxes out of play. Yes, that's right, you can take care of it all beforehand so that heirs aren't having to pay extra taxes.
What are National Insurance contributions in the United Kingdom and who has to pay them? How do taxpayers pay it? How much do they have to pay? 1. What Are They- National Insurance contributions are paid by people. They pay them in order to qualify for various benefits, such as State Pension. Some other benefits include a state pension, maternity allowance and bereavement benefits. 2. Who Makes The Contributions - National Insurance are payable by employees, employers and the self employed. For example, if you are an employee who earns more £155 per week, you may be liable. If you are self employed and your net profits were £5,965 or more in a tax year, you may have to pay them. UK citizens and residents need to have a National Insurance number before they can make contributions. 3. How Much Do You Pay- There are various factors that play a role in how much is payable towards National Insurance. Generally, the amount payable will depend on your profits if you are self employed. For the employed, the national insurance contributions depends on the pay . Rates may change when the tax year changes. People who tend to pay less include those who are a widow or a married woman with a certificate of election. Having a valid a valid small earnings exemption may result in less national insurance. People also pay less if they have more than one job. Aside from the above, there are a number of National Insurance rules. These include directors of a company, as well as landlords who run a property business. If you fall into either of these categories then you may want to consult a small business accountant who [...]
The job of an accountant is to keep track of numbers that primarily are the result of business activity. Keeping track of day to day transactions such as sales, inventory, discounts, taxes and the like can get very detailed and if not recorded and made into some kind of sense, could cause a business to fail for lack of proper information. In addition staying up to date on the value of assets, or that which is owned by a company, and liabilities, or that which is owed by a company is also very valuable information. Nowadays the day to day transactions are usually captured by computer with point of sale devices in a retail operation and by invoices in various other businesses. The computer then compiles the data that is received into reports that tells the business owner how well the business is doing , is not doing, and from that information accurate business decisions can be made. Taxes must be paid too, such as payroll taxes for employees which must be withheld from employee's wages and sent to the government. Income taxes also have to be paid by the business on its taxable profits. The overall health of a business entity is determined on a daily basis, and the job of the accountant is to keep track of all of the financial transactions so trends can be established. If the trends are good, they can be continued, but if they are bad, appropriate changes can be instituted. Without proper accounting procedures, a business could be in deep trouble and not even know it. Proper accounting is really the measure of whether the business is operating in a healthy manner, or whether there are problems. [...]
Self assessment & PAYE tax gap narrows The UK's tax gap, which is the difference between tax collected by HMRC through self assessment, disclosure schemes and tax investigations and the amount of tax owed has narrowed to 6.4%. This is welcoming news for both the Treasury and the economy as a whole. Much of the gap will relate to avoidance and evasion. Despite this fall, from 6.6% in 2012/2013, there is still a staggering £34bn to be collected, showing there is still much to be done, says ACCA (the Association of Chartered Certified Accountants). Chas Roy-Chowdhury, ACCA head of taxation, stated: "It is a huge credit to the staff at HMRC that they have managed to lower the tax gap despite constant cuts to their budget. However with £34bn still uncollected, and the government struggling to meet its borrowing target the Chancellor should reconsider his decision to cut HMRC’s resources. Corporate tax avoidance may be falling but there is still a sizeable amount lost due to innocent mistakes and evasion. It is in these areas where more resources for HMRC could be best deployed. In helping guide those who want to pay the right amount of tax and in investigating those who are determined not to pay tax. We should also remember that these figures include £1bn collected from accelerated payment notices. Those are a one off catch-up from historic schemes that won’t be repeated – and there is always the risk that even some of those amounts will have to be returned, as taxpayers are challenging HMRC’s approach in this area." Latest From The News Desk